Microsoft Office 365 Open Lets VARs Control Billing, Revenue

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Microsoft is ready to make Office 365 Open available to solution providers, allowing them to bill customers directly for annual subscriptions of the cloud-based suite for the first time.

Until now, solution providers had to sell Office 365 through Microsoft's Advisor model, which provided VARs a fee for handing the sale over to Microsoft. That model created consternation and frustration among many VARs that wanted to keep the Office revenue on their books. Now those partners can recognize the sale of Office 365, one of Microsoft's fastest-growing products, said Jon Roskill, corporate vice president of Microsoft's Worldwide Partner Group.

"This complements the other channel mechanisms for going to market with cloud. They can become the partner of record and get credits for future sales," Roskill said. "Since I arrived, two and a half years ago, we've had a set of partners tell us they want to recognize the top-line revenue and control margin and package our cloud services with their own offerings. Office 365 through Open allows them to do all of that."

Although more than 50,000 partners have been "involved" in Office 365, Roskill said, doing services, support and training around Office 365, less than half of that number, about 20,000 partners, have been selling Office 365 through the Advisor model, along with a number of telcos and other providers bundling it with high-speed broadband and other services through a syndication model.

Overall, that's a small percentage of the overall Microsoft partner community, and the Redmond, Wash.-based company hopes that many VARs will now look to add Office 365 Open to their portfolio because they can control the sale and billing.

"We believe that right now we are more than 10 times bigger than the next biggest cloud software competitor in terms of the channel. This is going to take us up to a whole other level. Fundamentally, it establishes leadership in the cloud for Microsoft in the channel for what we expect to be years to come."

Thus far, about 90 percent of Office 365 commercial customers are SMBs with 50 or less employees, Roskill said, which makes the product a good fit for partners selling into that market.

"It's taken us a bit longer to get this out than we would have liked, but the core thing in the world of cloud business model components and how we run transactions requires technical components in the product itself," Roskill said. "We wanted to make sure that was all right. We've been testing for some months now, and we feel it's ready to go."

Microsoft has spent the last couple of months training distributors including Ingram Micro, Synnex and Tech Data to arm those companies with the resources necessary to ramp VARs up quickly to sell Office 365 Open, Roskill said.

XChange Solution Provider 2015 is finally upon us and the timing couldn't be better. The premier channel event is happening March 1-3 in Dallas, bringing together 225 solution provider decision makers from across North America. CRN is at the event to provide news, analysis and a firsthand take from partners.